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Insurance Glossary

B

Beneficiary

The individual(s) designated to receive the benefits from a policy.

C

Critical Illness Cover

Pays out a lump sum if you are diagnosed with a specified critical illness.

Typical illnesses include:

  • Alzheimer’s Disease (before age 60)
  • Benign Brain Tumour
  • Blindness
  • Cancer
  • Coma
  • HIV - caught in the UK from a blood transfusion, physical assault or at work
  • Heart Attack
  • Kidney Failure
  • Loss of sight
  • Major Organ Transplant
  • Motor Neurone Disease
  • Multiple Sclerosis
  • Parkinson’s Disease
  • Stroke
  • Third Degree Burns
  • Total Permanent Disability

D

Death in service

Life insurance an employer provides that may be linked to a pension scheme. As cover ceases should you change jobs this is not normally suitable for mortgage protection.

Decreasing term insurance

This usually provides a lump sum in the event of death during the policy term. The amount of cover (sum assured) decreases over the term of the plan. This type of cover is usually used as the basis of a Mortgage Life Insurance plan to protect the declining balance of loan.

Deferred period

The amount of time after a claim is made before the insurer pays the policy benefit. Typically Income Protection policies will have a choice of deferred periods designed to fit in with typical employer sick pay benefits.

G

Guaranteed premium

Premiums will stay the same throughout the term of a policy.

I

Income protection

Provides income in the event of you not being able to work due to ill health. Payments are usually paid monthly until you either return to work, the policy term expires, you retire or death occurs.

L

Level term assurance

A policy that pays a fixed lump sum upon death during the policy term.

M

Mortgage life insurance

A decreasing term life insurance plan that’s designed to help protect a repayment mortgage by paying a lump sum in the event of death during the policy term. These are usually flexible plans with options available to pay insurance premiums and mortgage payments in the event of you becoming incapacitated by illness or injury.

P

Premium

The amount your insurer requires you to pay for cover.

Premium protection

Covers the cost of policy premiums during periods of unemployment due to illness or injury. Also known as waiver of premium.

R

Reviewable premium

Premiums are very likely to change over the term of the policy, an insurer may choose to review premiums at set intervals such as every five years.

S

Sum assured

The amount of money you are insured for from outset of a policy.

T

Terminal illness benefit

The sum assured from a life assurance plan becomes payable if you are diagnosed with a terminal illness where life expectancy is considered to be less than 12 months.

Trust

By placing the benefits of a policy “in trust” you can ensure that the correct person receives the proceeds. Assets held in a trust do not form part of an estate of a deceased person.

U

Underwriter

A person who assesses and classifies the degree of risk that a proposed insurance represents.

W

Waiver of premium

Covers the cost of policy premiums during periods of unemployment due to illness or injury. Also known as Premium Protection

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